Question 3 Consider the utility function of the form: ?=?1?1?2?2 Given the budget constraint: ?1?1+?2?2=? Show that the implied Marshallian demand curves are: ?1=?1(?1+?2)??1 ?1=?2(?1+?2)??2 Question 3Consider the utility function of the form:a2U = x¨*x2Given the budget constraint:P1X1 + P2X2 = MShow that the implied Marshallian demand curves are:MX1(a1 + a2) P1a2MX1 =(a1 + a2) P2

Answer to the question is as follows:

Question 3 Consider the utility function of the form: U = x¨*x2² Given the budget constraint: P1X1 + P2X2 = M Show that the implied Marshallian demand curves are: a1 M X1 = (a1 + a2) P1 a2 X1 = (a1 + a2) P2

Question 3 Consider the utility function of the form: U = x¨*x2² Given the budget constraint: P1X1 + P2X2 = M Show that the implied Marshallian demand curves are: a1 M X1 = (a1 + a2) P1 a2 X1 = (a1 + a2) P2

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Question 3

Consider the utility function of the form: ?=?1?1?2?2

Given the budget constraint: ?1?1+?2?2=?

Show that the implied Marshallian demand curves are: ?1=?1(?1+?2)??1 ?1=?2(?1+?2)??2

Question 3
Consider the utility function of the form:
a2
U = x¨*x2
Given the budget constraint:
P1X1 + P2X2 = M
Show that the implied Marshallian demand curves are:
M
X1
(a1 + a2) P1
a2
M
X1 =
(a1 + a2) P2

Defintion Defintion Curve that represents the graphical relationship between the total supply of goods and services and the price level in the economy. When the price level increases, producers tend to supply more of a product in the market to earn a higher revenue or vice versa.

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